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In late November, the UK Government announced that the new Arbitration Bill had taken its first step on its legislative journey to becoming law. The aim of the Bill is to enact certain amendments to the Arbitration Act 1996 as recommended by the Law Commission in its recent report.
Background to the Arbitration Bill
As has been widely publicised, following a detailed period of consultation, earlier this year the Law Commission of England and Wales published its final report containing various proposals to update and reform the Arbitration Act 1996 (the “AA”), the main statute which regulates arbitration in England and Wales, and Northern Ireland.
Not long afterwards, the UK Government announced (in the 2023 King’s Speech; being the outlining of the UK Government’s legislative programme for the upcoming parliamentary session) that it would introduce an Arbitration Bill in order to give effect to the Law Commission’s proposals.
The first iteration of that Bill has now been introduced in the House of Lords and received its first reading on 21 November 2023 (first reading being the formal presentation of a Bill into the legislative process). In the UK legislative process, bills can be introduced in either the House of Commons, or House of Lords.
What’s in the Bill?
Its content will come of no surprise to those who have followed the earlier Law Commission’s process as it largely follows the template provided by that body. So, the main reforms contained in the Bill cover:
Applicable law of an arbitration agreement: Introduction of a new default rule in favour of the law of the seat of arbitration; albeit with provision for the parties to agree otherwise (for example, in favour of the law of their main contract) provided they do so specifically.
Codifying arbitrators’ duty of disclosure: Placing the duty of disclosure laid down in Halliburton v Chubb on a statutory basis. The rationale is to make the rule more accessible, and extend it to pre-appointment discussions, whilst keeping the flexibility of the case-law.
Immunity of arbitrators: Extending protection to resignation (unless it was unreasonable) and costs liability in respect of applications for an arbitrator’s removal (unless they have acted in bad faith).
Summary disposal: The inclusion of a default power of summary disposal, exercisable on application by a party, and subject to a test of no real prospect of success on the relevant issue.
Section 44 AA and third parties: In order to resolve the debate in case-law as to whether orders under s.44 AA (powers of the court to support arbitral proceedings) can be granted against third parties, amendments are proposed to make clear the target being a third party is not, per se, a bar. The powers are simply to be the same as the court has in relation to court proceedings.
Emergency Arbitrators (EAs): Amendments to aid the enforcement of their orders in two ways. By allowing them to (i) following non-compliance, issue a peremptory order which can be enforced by the court and (ii) allowing an EA to give permission for an application under s.44 AA to be made.
Challenges to a tribunal’s award on jurisdiction under s.67 AA: amendments to permit court rules to be made which, in such cases, would limit the ability of parties to rely on new grounds, or evidence, before the court, and restrict its ability to re-hear evidence.
What happens next?
The progress of the Bill through Parliament will be watched closely. Bills need to progress through both Houses (Commons and Lords) before receiving Royal Assent and becoming law. Having said that, given the consultation process that was carried out by the Law Commission, it seems likely that substantive scrutiny of the Bill may be relatively straightforward and that, sometime in 2024, its final form will enter onto the statute book. That is, in any event, what the face of the Bill (which refers to the final legislative act as the “Arbitration Act 2024”) anticipates.
Click here to view the Bill, supporting documents and its progress.